The Great Gold Bust of 2013 is a major investment theme we've
been shouting about even before it turned into a full-fledged
market crash. It's been shock and awe for gold bugs, but not
The SPDR Gold Shares (NYSEARCA:GLD), which is linked to the
price of gold bullion, is down -1.40% today, -23% year-to-date, and
-32% from 2011 peaks. Gold focused ETFs that aim for inverse or
short exposure are (NYSEARCA:GLL) hot performers, but one
particular bear trade has been even better; shorting gold mining
Since the start of the year, gold mining stocks (NYSEARCA:GDX)
have been crushed -46%.
And while analysts and gold experts were telling their clients
to buy gold and gold mining stocks, we've repeatedly said to do the
In our time stamped
from Feb.14, 2013 we wrote to subscribers:
"Despite a modestly rising stock market, the Market Vectors
Gold Miners (
) has lagged both the broader U.S. stock market along with the
SPDR Gold Shares (
) by a very significant margin. At present, GDX trades around
$41.50 and is well below both its 50 ($44.41) and 200 ($46.06)
day moving average. Buy the Direxion Daily Gold Miners Bear 3x
) at these levels."
We bagged a +29% gain on our DUST trade and in that same report,
we told our subscribers to buy JUN 40 GDX put options at $190. On
our GDX puts we hit a grand slam with a +525% gain, and we
exited that position in early June at $1,200 per contract.
Fast forward to now.
Gold miners have enjoyed a +14% run since June 26, but as we
wrote in our Aug.1 report:
"It's just the sort of counter trend bounce you'd expect from a
dead fish that has fallen off a 2,000 foot skyscraper."
Meanwhile, gold miners are nuclear bombing shareholders with
multi-billion dollar losses.
A few days ago, Barrick Gold Corp. (
), the world's largest gold miner, reported the second largest
quarterly loss ever ($8.56 billion U.S.) for a publicly traded
Canadian company. (Nortel Networks' $19.4 billion Q2 loss in 2001
still holds the record) The company also slashed its dividend by
"Cheap" valuations have seduced value investors into buying gold
miners. And they've been quickly converted into victims of what we
call the "value trap."
How Gold Experts are Misleading the Public
According to most recent 13F filings, hedge fund titans like
George Soros, David Einhorn, and John Paulson are still long and
wrong about gold mining stocks. And shamefully, guru based trading
platforms and guru focused funds (NYSEARCA:GURU) have massacred
their gullible followers by closely mimicking these ill-timed hedge
At the end of July, hedge funds and speculators raised their
net-long position in 18 commodities, including precious metals, to
a six-week high. Clearly, market sentiment was overly bullish on
But instead of misinterpreting market sentiment data and
depressed valuations as a bottom, like gold experts have done, we
used it as a contrarian signal and high profit setup.
In our latest Weekly ETF Picks published on Aug. 1, we
"Buy the Direxion Daily Gold Miners Bear 3x Shares
(NYSEARCA:DUST) between $74-75. DUST aims for triple opposite
daily performance to mining stocks. Gold miners are a leveraged
play on physical metals and if the next leg down in metals prices
takes hold, as we suspect, miners should lead the way down."
How did it turn out? We recorded a time stamped one-week 35%
gain on our DUST trade. Furthermore, we've already bagged a 110%
gain on our tandem GDX put options trade offered up in that same
Sir John Templetonwas right when he said you can't "produce
superior investment performance if you buy the same assets at the
same time others are buying."
The next big and shocking move in the gold market is yet to
come. And if you think gold experts look clownish right now, just
Profit Strategy Newsletter
uses a combination of technical analysis, market sentiment, and
common sense to be on the right side of the market. Since the
beginning of the year, 78% of our ETF picks have turned a profit.
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